Crypto & Onchain · Foundations
How blockchains work
Ledgers, hashes, blocks, consensus and wallets, explained like a shared recon file nobody can edit.
Step 1 of 4 · Overview15 min read ·
Transaction
signed by your private key
Mempool
waiting to be included
Block
batch of txs + hash of previous block
Consensus
PoW (Bitcoin) / PoS (Ethereum)
Chain
append-only history
Each block contains the hash of the previous one, so altering old data changes every later hash. Thousands of nodes keep copies and agree on the next block via consensus.
| Term | Meaning |
|---|---|
| Private key | proves ownership; lose it, lose the coins |
| Wallet address | public receiving id |
| Gas | fee to run a transaction on Ethereum |
| Token (ERC-20) | a smart-contract balance sheet on Ethereum |
Key idea
Recon angle: a blockchain is a single shared ledger, so in theory there's nothing to reconcile between counterparties. That's the whole pitch of tokenized settlement.Next: Practice